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Archive for the ‘Pricing’ Category

My start in the industry came during the heyday of direct marketing: data was king and the data planner the key to unlocking the riches that the target consumer held. Stereotypically, a 28 to 35 year old housewife who regularly read the Daily Mail, enjoyed travel, eating out and cinema, had two or more credit cards and a direct debit to an animal charity, lived in a semi-detached house and had two cars parked on the drive.

Let’s look at idea generation from the Mad Men era to today. The brainstorming process is an integral part of agency life and to some it can feel like a daunting war zone. But when successfully navigating your way through the battlefield of the brainstorm, it can bring to life more overriding positives than any other agency activity.

When marketing agencies apply for a project for a company or government department, take part in a tender or get to the stage of costing out a campaign, they run up against the biggest pitfall in every medium to large-scale project: the client’s procurement department.

Procurement has already cut creative services budgets to the bone – which is why, presumably, so many big advertisers are now turning their attention to cashflow by extending payment terms in a way which has caused consternation (and potential financial distress) to their agencies.

Procurement departments now rule the roost when negotiating fees for suppliers in all industries, not just marketing. Officially, according to the Chartered Institute of Purchasing & Supply (CIPS), their role is about “more than just spending money.

“It’s about delivering a range of commercial benefits to an organisation and its customers. Professional procurement…is external resource management; managing the supply base as a key strategic resource in the same way IT professionals manage an organisation’s investment in technology, property professionals manage its estates, finance professionals its assets and HR professionals its human assets.”

In reality, in the experience of most marcomms agencies, procurement’s overarching objective is to decrease the agency fee and hence dictate the structure of the team on the project. Procurement departments usually have no real understanding of what a marketing project entails and concentrate purely on outlay not on results.

Indeed, in the midst of the recent horsemeat scandal, even the CIPS was forced to admit that procurement standards in supermarkets had fallen “woefully short” in managing supply chains. As that crisis proved, putting cost above quality as the prime selection criterion sets a highly dangerous precedent.

In our industry, of course, the reputational risks are somewhat less serious. But, all the same, the poor old marketing agency too often feels it has little choice but to reduce fees and cut the scope of work so as to remain profitable – and secure the work. However the work taken out of the agency’s remit still has to be carried out and nine times out of ten these jobs are picked up by the company’s increasingly over-stretched brand manager.

That in-house brand manager may have little or no experience of managing the different aspects of a complicated marketing project. One person in a company, or even a small team of in-house people, can’t possibly be expert in all the aspects including web build, sourcing, terms and conditions, legal contracts, print specification, consumer messaging etc. Wasn’t that why they needed an agency in the first place?

As the brand manager struggles under the weight of the “new” role, the project loses consistency, mistakes are made, quality is foregone and the whole campaign is compromised.

So it ends up as a lose/lose for everyone, when it could so easily, for a few extra pounds, have been a huge win/win. Perhaps it’s not too dissimilar to horsemeat after all – when you back the procurement model, there’s always a risk that you could lose your shirt.

Partner of the iOpener institute for People & Performance, Jessica Pryce-Jones

The role of the Chief Marketing Officer (CMO) is changing apace. The recession has increased the pressure on marketers to deliver results and be able to clearly demonstrate the impact of those results on the bottom line. Add into the mix the challenge of integrating customer data from an ever increasing range of communication channels, including social media, and it’s clear that CMO’s are facing an unusual set of hurdles. (more…)

In marketing production, we often see inefficient procurement practices due to the lack of proximity between these two functions. While most companies have made some headway towards optimising production – a vital component of every marketing campaign – this is often only in one or two areas such as print and pre-press.

As marketing techniques continue to evolve and brands shift their focus towards digital, tackling production is becoming a more complex issue for marketing and procurement professionals alike. (more…)

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